New and revised pronouncements as at 30 September 2020
13 Oct, 2020
Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 30 September 2020. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.
The information below reflects developments to 21 December 2020 and will be updated through to 31 December 2020 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 September 2020. For accounts approved after December 2020, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.
The information below is organised as follows:
Summary
COVID-19 accounting considerations
Below is our usual analysis of new and amended standards, however, we are also aware that most, if not all, entities will have been impacted by the COVID-19 events. Please see our Need to know — Accounting considerations related to the Coronavirus 2019 Disease highlighting some of the key issues to be considered by the entities in preparing their financial statements and our UK Accounting Plus resource page on accounting considerations related to COVID-19.
The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 30 September 2020, for various quarterly reporting periods. Where an EU entity chooses to prepare financial statements in accordance with IFRS Standards as issued by the IASB, as well as in compliance with IFRS Standards as adopted by the EU, that entity should comply with the earlier IASB effective date for those items. The table below provides a summary of these pronouncements, and which reporting periods they apply to:
Pronouncement | IASB Effective date* | EU effective date* | EU Mandatory at 30 September 2020? | |||
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1st qtrs.** | 2nd qtrs.*** | 3rd qtrs.**** | Full yrs***** | |||
IFRS 16 Leases | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
NEW OR REVISED INTERPRETATIONS | ||||||
IFRIC 23 Uncertainty over Income Tax Treatments | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
Annual Improvements 2015-2017 Cycle | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4) |
1 January 2018 | 1 January 2018 | Optional ~ | Optional ~ | Optional ~ | Optional ~ |
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
Prepayment Features with Negative Compensation (Amendments to IFRS 9) | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) | 1 January 2019 | 1 January 2019 | Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Yes |
Amendments to References to the Conceptual Framework in IFRS Standards | 1 January 2020 | 1 January 2020 | Yes | Yes | Yes | No |
Definition of Material (Amendments to IAS 1 and IAS 8) | 1 January 2020 | 1 January 2020 | Yes | Yes | Yes | No |
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) | 1 January 2020 | 1 January 2020 | Yes | Yes | Yes | No |
Definition of a Business (Amendments to IFRS 3) | 1 January 2020 | 1 January 2020 | Yes | Yes | Yes | No |
Covid-19-Related Rent Concessions (Amendment to IFRS 16) | 1 June 2020 | 1 June 2020 | Yes | No | No | No |
* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).
** 1st quarter ending on 30 September 2020 (accounting period began on 1 July 2020).
*** 2nd quarter ending 30 September 2020 (accounting period began 1 April 2020).
**** 3rd quarter ending 30 September 2020 (accounting period began 1 January 2020).
***** 4th quarter ending 30 September 2020 (accounting period began 1 October 2019).
~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
More information about these pronouncements, and all new and revised pronouncements, is set out below.
Financial statement considerations in adopting new and revised pronouncements Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:
Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation. |
New or revised standards
The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRS Standards that are in issue but not yet effective and which are likely to impact the entity
New or revised pronouncement | When EU effective |
Application at 30 September 2020 to: |
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1st qtrs | 2nd qtrs | 3rd qtrs | Full yrs | ||
IFRS 16 Leases IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
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Applicable to annual reporting periods beginning on or after 1 January 2019 |
Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | Already applied in prior period (Jan 2019) | Mandatory |
IFRS 17 Insurance Contracts IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021. Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter). |
Applicable to annual reporting periods beginning on or after 1 January 2023. The original effective date of IFRS 17 of 1 January 2021 was amended by Amendments to IFRS 17 issued by the IASB in June 2020. Not yet endorsed for use in the EU. |
New or revised interpretations
New or revised interpretation | When effective | Application at 30 September 2020 to: | |||
1st qtrs. | 2nd qtrs. | 3rd qtrs | 4 qtrs. | ||
IFRIC 23 Uncertainty over Income Tax Treatments The interpretation sets out how to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments under IAS 12 Income Taxes. The Interpretation requires an entity to:
Issued: 7 June 2017 (article) |
Effective date: annual periods beginning on or after 1 January 2019. Entities can apply the Interpretation either on a fully retrospective or modified retrospective approach (where comparatives are not permitted or required to be restated).
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Already applied in prior period (July 2019) |
Already applied in prior period (April 2019) |
Already applied in prior period (Jan 2019) |
Mandatory |
Amendments
New or revised pronouncement | When effective | Application at 30 September 2020 to: | |||
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1st qtrs | 2nd qtrs | 3rd qtrs | Full yrs | ||
Editorial Corrections (various) The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019, May 2019, December 2019, July 2020, September 2020, October 2020 and November 2020.. Note: For details of these editorial corrections, see our IASB editorial corrections page. |
As minor editorial corrections, these changes are effectively immediately applicable under IFRS | See comment in previous column | |||
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)
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Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018. In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.
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Optional |
Optional |
Optional |
Optional |
Annual Improvements 2015-2017 Cycle
Makes amendments to the following standards:
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The amendments are all effective for annual periods beginning on or after 1 January 2019. |
Already applied in prior period (July 2019) | Already applied in prior period (April 2019) | MandatoryAlready applied in prior period (Jan 2019) | Mandatory |
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
The amendments clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
The amendments in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) are:
Issued:12 October 2017 (article)
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Annual periods beginning on or after 1 January 2019
Annual periods beginning on or after 1 January 2019
Annual periods beginning on or after 1 January 2019 |
Already applied in prior period (July 2019) |
Already applied in prior period (April 2019) |
Already applied in prior period (Jan 2019) |
Mandatory |
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
The amendments address concerns about how IFRS 9 Financial Instruments classifies particular prepayable financial assets. In addition, the IASB has clarified an aspect of the accounting for financial liabilities following a modification.
The amendments are:
Changes regarding symmetric prepayment options Under the current IFRS 9 requirements, the SPPI condition is not met if the lender has to make a settlement payment in the event of termination by the borrower (also referred to as early repayment gain). Prepayment Features with Negative Compensation amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. Under the amendments, the sign of the prepayment amount is not relevant, i. e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favour of the contracting party effecting the early repayment. The calculation of this compensation payment must be the same for both the case of an early repayment penalty and the case of a early repayment gain. Clarification regarding the modification of financial liabilities The final amendments also contain (in the Basis for Conclusions) a clarification regarding the accounting for a modification or exchange of a financial liability measured at amortised cost that does not result in the derecognition of the financial liability. The IASB clarifies that an entity recognises any adjustment to the amortised cost of the financial liability arising from a modification or exchange in profit or loss at the date of the modification or exchange. A retrospective change of the accounting treatment may therefore become necessary if in the past the effective interest rate was adjusted and not the amortised cost amount. Issued: 12 October 2017 (article)
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The amendments are to be applied retrospectively for fiscal years beginning on or after 1 January 2019, i. e. one year after the first application of IFRS 9 in its current version. Early application is permitted so entities can apply the amendments together with IFRS 9 if they wish so. Additional transitional requirements and corresponding disclosure requirements must be observed when applying the amendments for the first time. |
Already applied in prior period (July 2019) |
Already applied in prior period (April 2019) |
Already applied in prior period (Jan 2019) |
Mandatory |
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:
Issued: 7 February 2018 (article) |
Annual periods beginning on or after 1 January 2019. |
Already applied in prior period (July 2019) |
Already applied in prior period (April 2019) |
Already applied in prior period (Jan 2019) |
Mandatory |
Amendments to References to the Conceptual Framework in IFRS Standards
Issued: 29 March 2018 (article) |
Annual periods beginning on or after 1 January 2020 |
Mandatory |
Mandatory |
Mandatory |
Optional |
Definition of a Business (Amendments to IFRS 3) The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:
Issued: 22 October 2018 (article/newsletter) |
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Mandatory |
Mandatory |
Mandatory |
Optional |
Definition of Material (Amendments to IAS 1 and IAS 8) The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards. Issued: 31 October 2018 (article)
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Annual reporting periods beginning on or after 1 January 2020 |
Mandatory |
Mandatory |
Mandatory |
Optional |
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform. Issued: 26 September 2019 (article) |
Annual reporting periods beginning on or after 1 January 2020 |
Mandatory |
Mandatory |
Mandatory |
Optional |
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current Issued: 23 January 2020 (article) |
Annual reporting periods beginning on or after 1 January 2023 (see 'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)' below). Original effective date 1 January 2022. Not yet endorsed for use in the EU.
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Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) The amendments amend IAS 16 to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss. Issued: 14 May 2020 (article, newsletter) |
Annual reporting periods beginning on or after 1 January 2022 |
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Annual Improvements 2018-2020 Cycle Makes amendments to the following standards:
Issued: 14 May 2020 (article, newsletter) |
The amendments to IFRS 1, IFRS 9, and IAS 41 are all effective for annual periods beginning on or after 1 January 2022. Early application is permitted. The amendment to IFRS 16 only regards an illustrative example, so no effective date is stated.
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Reference to the Conceptual Framework (Amendments to IFRS 3) The changes:
Issued: 14 May 2020 (article, newsletter) |
The amendments published today are effective for annual periods beginning on or after 1 January 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier Not yet endorsed for use in the EU |
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Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) The changes specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). Issued: 14 MAy 2020 (article, newsletter) |
Annual reporting periods beginning on or after 1 January 2022 |
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Covid-19-Related Rent Concessions (Amendment to IFRS 16) Amends IFRS 16 to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. The changes:
The practical expedient applies to COVID-19-related rent concessions that result in reduction in lease payments due on or before 30 June 2021. Issued: 28 MAy 2020 (article,newsletter)
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The amendment is effective for annual reporting periods beginning on or after 1 June 2020.
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Mandatory |
Optional |
Optional |
Optional |
Amendments to IFRS 17 Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017. The main changes are:
Issued: 25 June 2020 (article)
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The amendment is effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted. Not yet endorsed for use in the EU. |
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Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023. Issued: 25 June 2020 (article) |
In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023. |
Optional |
Optional |
Optional |
Optional |
'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)' The amendment defers the effective date of the January 2020 amendments (see above) by one year. Issued: 15 July 2020 (article)
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The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023. Earlier application of the January 2020 amendments continue to be permitted. Not yet endorsed for use in the EU. |
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Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) Issued: 27 August 2020 (article)
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Annual reporting periods beginning on or after 1 January 2021. Not yet endorsed for use in the EU |